While fluctuations in economic conditions can create uncertainty for workers and businesses, research evidence available in Workforce System Strategies presents findings from two recent studies of a UI program available to employers, Short-Time Compensation (STC). 

This program can delay or avoid worker layoffs, by allowing employers to reduce all employees’ hours, whose lost earnings are made up for in partial unemployment benefits, until demand picks up. A third report measures the macro economic impact of Unemployment Insurance in stabilizing the economy during the last recession. 

Employer Views about the Short-Time Compensation Program: A Survey and Analysis in Four States
This report on a 2016 study of employer views about the Short-Time Compensation (STC) Program reveals the characteristics of employers, employer awareness of, participation in, and perceptions of STC in Kansas, Minnesota, Rhode Island, and Washington. In addition to survey data from STC- and non-STC employers in the four states, the study also analyzed administrative data and reviewed the relevant literature. The study team found that employers who used STC appreciated that it helped them to retain skilled workers, avoid layoffs, and were likely to use program again. However, employers without STC experience were unaware of the program, its costs, and its benefits.

The Role of Unemployment Insurance as an Automatic Stabilizer during a Recession
The authors of this research report share a multi-year analysis of how each UI program component and the UI program overall is a stabilizing force for the U.S. economy. Analysis of data from the 2007-2009 Great Recession reveals that during periods of deep recession, Unemployment Insurance (UI) benefit payments slow economic decline by providing compensation to unemployed workers. By partially compensating for lost wages, UI benefits offer unemployed workers with the means to continue fueling the consumer-based economy and slow the economic decline. Interestingly, the stabilizing effect increases with extended benefits and positively affects the gross domestic product (GDP) indicator.

Demonstration and Evaluation of the Short-Time Compensation Program in Iowa and Oregon
This report, from 2017, documents the demonstration projects in Iowa and Oregon to evaluate the effectiveness of several interventions to increase employer awareness and use of short-time compensation (STC), also known as work sharing. Interventions took place over 12 months and included disseminating information about the STC program to specific employers (treatment group) and providing them with a temporary unemployment insurance (UI) tax holiday for STC program benefits. The findings indicated that employers’ lack of awareness about the program, combined with their concerns about UI tax rate costs, were barriers to broader use of the STC program in Iowa and Oregon.

Major Findings & Recommendations